To overcome the key escrow issues of the identity based cryptography, the researchers proposed a new CertificateLess Two-party Authentication Key Agreement (CL-2AKA) protocol. In this paper an improved CL-2AKA Protocol has been proposed. The proposed protocol CAKA (Certificateless Authentication Key Agreement Protocol) is based on the algebraic properties of the pairing. The proposed protocol attempts to mitigate the man-in-the middle and Key-compromise impersonation attacks. Is found to be more efficient on computation and has more compact cipher text than the existing schemes.